Even after emerging from bankruptcy, General Motors assumed all most of the contracts between Motors Liquidation Company and the UAW. This agreement has come back to bite GM in the you-know-what. The day before GM released its financial results for the latter part of 2009, the UAW filed suit against The General to the tune of $450 million.

It appears that General Motors had a commitment to the UAW in funding the Voluntary Employee Beneficiary Association (VEBA), which provides healthcare for retired employees. According to the union, it submitted a written request to GM for the payments last November. However, GM has not responded or made any payments in response. But this case doesn’t appear to be as simple as a he-said-she-said by any stretch of the imagination. The problem, as it turns out, involves Delphi.

Similar to GM’s bankruptcy proceedings in the middle of last year, Delphi filed for bankruptcy in 2005. Its agreement with the UAW included an up to $10/hour pay reduction, plant closures, and other union concessions, with the UAW reporting that GM was involved in the original deal. GM also acquired some manufacturing facilities as well as Delphi’s steering division during Delphi’s bankruptcy. Even though this is a very simplified version of the relationship between the two companies, it is the part of the relationship that requires GM to pay into the VEBA fund.

GM is looking for further concessions from the union for the plants and steering unit in question. So far, wage concessions have been rejected by the union, but they are scheduled to re-vote on the matter in due time. More as it happens…

[Source: Freep]